The Bank continues to monitor the impact on both builders and buyers of tighter mortgage rules, regional housing policy changes, and higher interest rates.
Canada's central bank chief indicated during a news conference in Toronto on Thursday that he may not be able to do much to lift markets, which have slumped this week amid concerns that trade tensions between China and the US are far from resolved.
Despite the hold, the central bank plans to continue the gradual tightening initiated in 2017. The central bank raised its rate to that level in October, and has hiked rates five times since the summer of 2017.
But the timing of upcoming rate increases, the bank said, will now depend on several new factors that have emerged in recent weeks. Swaps trading suggests the Bank of Canada will cap its hiking cycle at no more than 2.25 percent, below its estimate of a "neutral" range for rates of between 2.5 percent and 3.5 percent.
Stephen Poloz, Governor of the Bank of Canada, returns to the Bank of Canada after holding a press conference at the National Press Theatre in Ottawa on Wednesday, Oct. 24, 2018.
Following the decision, many experts now expect Poloz to wait even longer.
The Bank of Canada is scheduled to announce its next decision on interest rates on January 9. This "materially reduces the odds of a January rate hike".
Oil prices have fallen sharply since the October Monetary Policy Report (MPR), reflecting a combination of geopolitical developments, uncertainty about global growth prospects, and expansion of USA shale oil production. The price of western Canadian oil, the bank added, has fallen further than other benchmarks because of transportation constraints that have led to production cuts.
"That said, given the consolidation that has taken place in the energy sector since 2014, the net effects of lower oil prices on the Canadian economy as a whole, dollar for dollar, should be smaller than they were in 2015". The bank says it's related to factors such as a drop in business investment, which it largely connects to the significant uncertainty around trade last summer.
It will also be watching for positive developments such as more signs the economy can still expand without stoking inflation. Downward historical revisions by Statistics Canada to GDP, together with recent macroeconomic developments, indicate there may be additional room for non-inflationary growth. CPI inflation, at 2.4 per cent in October, is just above target but is expected to ease in coming months by more than the Bank had previously forecast, due to lower gasoline prices.